Deposit and down payment: what's the difference?
THE HOME GUIDE · 30
Deposit and down payment: what's the difference?
Buying a home brings more than one payment. Knowing the timing can prevent a scramble.
ABOUT 3 MINUTES TO READ
A QUICK LOOK · THREE THINGS TO KNOW
01 / START HERE
The deposit comes early
A deposit is money paid as part of the home deal.
02 / START HERE
The down payment is bigger
The down payment is the money you put toward the home price instead of borrowing.
03 / START HERE
Know what happens if a deal fails
What happens to the deposit depends on the agreement and the facts.
A buyer may hear the words deposit and down payment in the same talk. The two are linked, but they happen at different times and serve different jobs.
PART 01
The deposit comes early
A deposit is money paid as part of the home deal. The agreement says how much and when it is due.
PART 02
The down payment is bigger
The down payment is the money you put toward the home price instead of borrowing. The deposit usually counts toward it at closing.
PART 03
Know what happens if a deal fails
What happens to the deposit depends on the agreement and the facts. Do not assume it comes back in every case. Ask a lawyer.
A SMALL STEP YOU CAN TAKE
One thing to check today
Write down when the deposit is due and how the rest of your money will arrive.
HOW TO USE THIS
If you are buying or selling
If you are buying
Keep the deposit money ready and know where it is to be paid.
If you are selling
Make the deposit terms and dates clear in the agreement.
SAVE THIS LIST
Three questions worth asking
- When is the deposit due and where is it held?
- How will it be credited at closing?
- What does the agreement say if the deal cannot complete?
SOURCE AND FURTHER READING
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